Tribune in deal to buy Sony's Gracenote

Tribune Co. has agreed to buy Gracenote, which provides music data for iTunes and other digital applications, from Sony Corporation of America.

The $170 million deal, announced Monday, will combine Gracenote with Tribune Media Services, expanding Tribune Co.’s reach in the digital entertainment data space.

“As we strategically invest in growth areas, increase our scale, and extend our core businesses, Gracenote is an ideal addition to our portfolio,” Tribune Co. CEO Peter Liguori said in a memo to employees. “Bringing together Gracenote with Tribune Media Services will create one of the largest entertainment metadata companies in the world.”

A 15-year-old company, Gracenote is best known for providing data on more than 180 million music tracks for Apple’s iTunes and other digital applications. The Gracenote database is accessed whenever a music CD is imported into an iTunes library, supplying everything from song titles and artist information to cover art.

The company is also gaining traction in the automotive space, powering the digital media capabilities of many manufacturers. Systems such as the Ford Sync use Gracenote to play music by voice recognition, and to integrate digital libraries from smart phones, providing on-screen song titles and cover art for easier navigation.

Gracenote also provides data for movies and TV shows, dovetailing with Tribune Media Services, which collects and syndicates data for electronic TV program guides, movie show times and entertainment websites. TMS clients include DirecTV, Time Warner Cable, Google and Microsoft.

“Gracenote and TMS are an ideal fit,” Shashi Seth, president of Tribune Digital Ventures, said in a statement. “Together we will become an even greater force in the global entertainment data business by servicing new and existing customers with better data, new products, and new services to help an evolving entertainment industry.”

Annual revenues for Gracenote are over $100 million, according to sources close to the company.

While Gracenote has achieved double-digit annual revenue growth for more than a decade, Sony is selling it at a discount to its 2008 purchase price of $260 million. In a statement Monday, Sony said it expects to record a $60 million gain on the sale, after previously writing down the value.

The transaction is expected to close in the first quarter of 2014, subject to regulatory approval.

Last week, Tribune Co.’s $2.73 billion acquisition of Cincinnati-based Local TV LLC was approved by the Federal Communications Commission, as the Chicago-based media company focuses on its higher-margin broadcast and digital assets. Earlier this month, the company filed a registration form with the Securities and Exchange Commission in advance of spinning off the Chicago Tribune, Los Angeles Times and six other daily newspapers into a separate publishing company, likely during the first half of 2014.